Brussels-based pan-European settlement house Euroclear has posted its results for the first quarter of 2020. Highlights include the following.

Q1 20 revenues up 9 percent year-on-year, to EUR 383 million

Business Income rose 15 percent to EUR 321 million

Banking and Other Income decreased 14 percent to EUR 62 million

Operating costs up by 4 percent to EUR 213 million, in line with expectations

Net profit was up 29 percent to EUR 127 million

Dividend approval to be postponed to Q4 2020 in light of recent ECB guidance

Liquidity initiative stopped due to current uncertain environment

COVID-19 outlook: business income evolution uncertain; interest-related income hit by interest rate cuts

Euroclear business update

"Global markets are exceptionally volatile as participants attempt to understand the wide-ranging implications of COVID-19. During this time, our key priorities are the welfare and wellbeing of our people, whilst ensuring business resilience in our critical role as financial market infrastructure, and continuing to safeguard both our clients' and Euroclear's assets.

"In seeking to protect the health and safety of our people, we moved to wholesale homeworking, with nearly all our people working remotely. We have taken several other initiatives to support staff wellbeing during this difficult period.

"Our Business Continuity Plan is working well to support our customers' needs even with the exceptional settlement volumes experienced in the first quarter across the financial markets. Sustained investment over recent years in new technologies, cyber security and optimising our ways of working has helped to minimise operational risk and build a more resilient business, allowing us to support our customers and our people through this difficult time.

"The strong performance in business income at the end of 2019 continued into the first months of 2020, before the recent heightened volatility, seen across markets, resulted in much greater activity. As a result, the group delivered exceptionally strong growth in business income during the first quarter, above our long-term, through-the-cycle growth trajectory. This activity has recently begun to normalise, with volumes reverting towards more typical levels. Lower market valuations are expected to impact our revenue performance in certain asset classes, such as equities, balancing the overall full year performance.

"Central banks lowered policy rates in response to the economic crisis and that has reduced our interest-related income in the quarter. We expect that an ongoing lower interest rate environment will continue to substantially impact Banking and Other Income over the coming quarters, with a yearly decline of approximately 50 percent anticipated in 2020, compared to 2019 results."

Capital and dividend

"We have a strong balance sheet and capital position. Given our disciplined risk management, limited leverage and prudent liquidity position, the Board remains confident in Euroclear's financial strength.

"However, in light of recent guidance from the European Central Bank (ECB) and the National Bank of Belgium regarding dividend distribution policy in the context of the COVID-19 crisis, the Board has taken the decision to postpone its approval of the dividend announced in February, until Q4 2020."

Shareholder liquidity initiative

"In December 2019, the Board completed the study phase of the process to find a liquidity solution for the benefit of all of our shareholders. Given the current uncertain environment, the Board has decided to stop all work on a tentative liquidity initiative, and wait until economic activity and market stability has been restored in a sustained way to consider the matter again."

Marc Antoine Autheman, Chairman, said: "The Euroclear group continues to demonstrate exceptional levels of robustness and resilience as we support global financial markets during a period of great strain.

‘On behalf of the Board, I would like to express gratitude to our people from across every entity of the group for how they have responded to the COVID-19 crisis. Thanks to their dedication we have been able to maintain services of the highest quality and security to all clients."

Lieve Mostrey, Chief Executive Officer, added: "This year has already proven to be challenging for the financial markets, with recent events demonstrating the need for a strong and adaptable market infrastructure.

"Our business, people and systems have shown resilience, and their proven robustness, to support the financial market ecosystem in these unprecedented times. Thanks to all our staff's efforts, we remain focused on delivering for our stakeholders while monitoring the COVID-19 situation very closely.

"In recognition of the important responsibility we have to society and our local communities, we have made a donation of EUR 1 million to charities that are tackling the COVID-19 crisis. The donation will be allocated to local charitable causes, such as hospitals and vaccination research, in each of the main countries where Euroclear operates."

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Brussels-based pan-European settlement house Euroclear has posted its results for the first quarter of 2020. Highlights include the following.

Q1 20 revenues up 9 percent year-on-year, to EUR 383 million

Business Income rose 15 percent to EUR 321 million

Banking and Other Income decreased 14 percent to EUR 62 million

Operating costs up by 4 percent to EUR 213 million, in line with expectations

Net profit was up 29 percent to EUR 127 million

Dividend approval to be postponed to Q4 2020 in light of recent ECB guidance

Liquidity initiative stopped due to current uncertain environment

COVID-19 outlook: business income evolution uncertain; interest-related income hit by interest rate cuts

Euroclear business update

"Global markets are exceptionally volatile as participants attempt to understand the wide-ranging implications of COVID-19. During this time, our key priorities are the welfare and wellbeing of our people, whilst ensuring business resilience in our critical role as financial market infrastructure, and continuing to safeguard both our clients' and Euroclear's assets.

"In seeking to protect the health and safety of our people, we moved to wholesale homeworking, with nearly all our people working remotely. We have taken several other initiatives to support staff wellbeing during this difficult period.

"Our Business Continuity Plan is working well to support our customers' needs even with the exceptional settlement volumes experienced in the first quarter across the financial markets. Sustained investment over recent years in new technologies, cyber security and optimising our ways of working has helped to minimise operational risk and build a more resilient business, allowing us to support our customers and our people through this difficult time.

"The strong performance in business income at the end of 2019 continued into the first months of 2020, before the recent heightened volatility, seen across markets, resulted in much greater activity. As a result, the group delivered exceptionally strong growth in business income during the first quarter, above our long-term, through-the-cycle growth trajectory. This activity has recently begun to normalise, with volumes reverting towards more typical levels. Lower market valuations are expected to impact our revenue performance in certain asset classes, such as equities, balancing the overall full year performance.

"Central banks lowered policy rates in response to the economic crisis and that has reduced our interest-related income in the quarter. We expect that an ongoing lower interest rate environment will continue to substantially impact Banking and Other Income over the coming quarters, with a yearly decline of approximately 50 percent anticipated in 2020, compared to 2019 results."

Capital and dividend

"We have a strong balance sheet and capital position. Given our disciplined risk management, limited leverage and prudent liquidity position, the Board remains confident in Euroclear's financial strength.

"However, in light of recent guidance from the European Central Bank (ECB) and the National Bank of Belgium regarding dividend distribution policy in the context of the COVID-19 crisis, the Board has taken the decision to postpone its approval of the dividend announced in February, until Q4 2020."

Shareholder liquidity initiative

"In December 2019, the Board completed the study phase of the process to find a liquidity solution for the benefit of all of our shareholders. Given the current uncertain environment, the Board has decided to stop all work on a tentative liquidity initiative, and wait until economic activity and market stability has been restored in a sustained way to consider the matter again."

Marc Antoine Autheman, Chairman, said: "The Euroclear group continues to demonstrate exceptional levels of robustness and resilience as we support global financial markets during a period of great strain.

‘On behalf of the Board, I would like to express gratitude to our people from across every entity of the group for how they have responded to the COVID-19 crisis. Thanks to their dedication we have been able to maintain services of the highest quality and security to all clients."

Lieve Mostrey, Chief Executive Officer, added: "This year has already proven to be challenging for the financial markets, with recent events demonstrating the need for a strong and adaptable market infrastructure.

"Our business, people and systems have shown resilience, and their proven robustness, to support the financial market ecosystem in these unprecedented times. Thanks to all our staff's efforts, we remain focused on delivering for our stakeholders while monitoring the COVID-19 situation very closely.

"In recognition of the important responsibility we have to society and our local communities, we have made a donation of EUR 1 million to charities that are tackling the COVID-19 crisis. The donation will be allocated to local charitable causes, such as hospitals and vaccination research, in each of the main countries where Euroclear operates."